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Microcap & Penny Stocks : AWLT wines and gourmet food - Italy Direct
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To: JOE TURMAINE who wrote (2196)11/5/1998 6:58:00 PM
From: William Lewis Perdue III  Read Replies (1) of 2595
 
Chapter 11 is the reorganization chapter of bankruptcy (Chapt 7 is the liquidation one) so they will be required to submit a plan of reorganization in the next few months...companies in chapter 11 can continue to operate while being protected from legal actions or the collection of debts that were incurred up until the filing. The usual outcomes of a chapt 11 are (NOT in order of frequency or likelihood): (1) company reorganizes itself out of chapter 11 while shedding some debt by making deals with creditors, (2) finds additional money either through an outright sale or having new investor(s) come in, (3) is forced into Chapter 7 liquidation.

They will have to have their finances scrutinized in detail by the court and the bankruptcy trustee and will have to file detailed operating statements with the court.

If the company is sold or liquidated, Secured creditors (people with valid liens and UCC filings), employee salary claims and The IRS are usually at the top of the list...if there is anything left over it goes to unsecured creditors and if there is anything left over after that it may go to equity shareholders.

Bankruptcy judges have a great deal of leeway in how cases are handled, so the above is a fairly general/typical scenario and not at all specific or indicative of Araldica's specific circumstances.

Significantly, creditors are specifically prohibited from demanding payment of their debts and can be held in contempt of court for making those demands or threatening company officials.
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